Can Innovation help the Base of Poverty Rise?
Posted By Sidney on March 1, 2009
Copyright World Economic Forum Photo by Liu Ying
In 1998, C.K. Prahalad and Stuart L. Hart introduced an idea to target over four billion people globally who make less than $1,500 US annually, known as the Base of the Pyramid(BoP), to co-develop a culturally-competent, commercial model with large multinational corporations that could improve and sustain lives in BoP communities. The model was further expanded by Prahalad in The Fortune at the Bottom of the Pyramid and Hart in Capitalism at the Crossroads, written in 2004 and 2005 respectively.
The BoP concept was improved in 2008 in The Base of the Pyramid Protocol: Toward Next Generation BoP Strategy (PDF) where Erik Simanis and Stuart Hart sought to move BoP from a consumption-based model that focused on understanding local needs (selling to the poor) to a co-invention and business co-creation model that involves a more intimate partnership between the corporations and the BoP communities.
At the Alleviating Poverty with Entrepreneurship Summit, Ted London called this “embedded innovation.” London recently developed a working paper titled “The base of the pyramid impact assessment framework: Enhancing mutual value creation” for the United Nations Development Programme. London will present his findings regarding the impact of BoP in the May 2009 issue of the Harvard Business Review.
I am surprised that I have not heard of this promising framework for alleviating poverty within my philanthropic circles, especially since it has been in existence for over 10 years. One would assume that there would be significant buzz about this model that would spill over and become a common foundation discussion topic (even though BoP was designed to focus primarily on poverty in developing countries). I hope that London’s work will be a catalyst for foundation practitioners and thought-leaders alike to issue a call for repurposing BoP to address urban and rural poverty in the US.
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